The wearables tech company is suffering a bout of ill health as it faces two separate lawsuits, plunging share prices and a lukewarm reception to its newest gadget.
If Fitbit Inc. could hit rewind or reset on 2016, it probably would.
Just two weeks into the new year, the top-selling wearables tech company has been hit with two class action lawsuits, lukewarm reception for its newest wearable device and falling share prices.
Fitbit’s first blow of 2016 came at the tech industry’s annual blowout event — the Consumer Electronics Show in Las Vegas — where it unveiled its Fitbit Blaze watch and received a less-than-enthusiastic response.
According to the Silicon Valley Business Journal, although Fitbit likely thought the $200 fitness watch was “a smart add-on to its line of fitness-tracking wearables [it looks] like weak tea when compared to the Apple Watch, with its apps and connections to the iPhone.”
The SVBJ said the wearable tech company’s stock “meltdown” began immediately following the launch of the fitness watch.
Just a day after the Blaze’s cool reception at the tech trade show, Fitbit was slapped with a consumer-filed class action lawsuit accusing it of false advertising regarding its devices’ heart rate monitoring system, Bloomberg reports. The suit, filed Jan. 6 in a San Francisco federal court, claims that Fitbit’s heart rate monitoring devices are “wildly inaccurate,” sometimes “mis-recording heart rates” by 50 percent.
“We do not believe this case has merit,” Heather Pierce, a spokeswoman for the company, said in an email to Bloomberg. “Fitbit stands behind our heart rate technology and strongly disagrees with the statements made in the complaint and plans to vigorously defend the lawsuit.”
On the heels of the legal action on behalf of consumers, Fitbit’s legal troubles intensified when an investor filed a class action lawsuit against Fitbit over alleged “fraud on the market” and U.S. securities law violations, Fortune reports.
The latest suit seeks compensation for people who bought Fitbit shares during the IPO last summer through last week, when allegations of Fitbit’s inaccurate heart monitors became known and stock prices tumbled on Jan. 6.
The investor complaint – which alleges that the company made “false and misleading” statements about its heart monitoring technology – reads:
“As a result of Defendants’ false and/or misleading statements, Fitbit securities traded at inflated prices. However, after disclosure of Defendants’ false and/or misleading statements, Fitbit’s stock suffered a precipitous decline in market value, thereby causing significant losses and damages to Plaintiff and other Class members.”
A Fitbit spokesperson told Fortune:
“We have reviewed the [investor] complaint and believe it is meritless. We intend to defend this case vigorously.”
Fortune said shareholder lawsuits like this are fairly common when a company’s reputation takes a public hit, like Fitbit’s did last week with the heart monitoring lawsuit.
According to CBS, Fitbit Inc. shares dipped on Monday, falling below the initial public offering price of $20 before climbing back toward $20 on Tuesday.
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